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Another Indication The Bull Market is Coming to an End!


Parsad

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economics is a guesswork, it's not hard science like chemistry or physics. it's not always 100% correct. you have your economic data and based on that information economists speculate about the direction of countries. so mistakes will always happen. sometimes economists, investors or traders are right and sometimes they are wrong. she said that she is learning about the stock market, which is fine, and she declined to give a name of a potential investment, which is smart, because if that investment goes wrong and the public knows about it, well that would be bad pr for her.

 

that being said, she seems to be at the corporate headquarters of uk company Gemfields (you can see the corporate name in the background). when you go to their corporate homepage you can see mila kunis with jewellery of that company. she was probably hired by the company to be a brand ambassador. talking about "internet stocks" was probably just a smart pr move by the company to create buzz for their jewellery line. and it seems to have worked. we and others talk about it.  ;D

 

http://corporate.gemfields.co.uk/index.php

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Are you guys kidding or half/full-serious, I can't tell.

 

Anyways, if you're serious, with all due respect, I'm betting you will be disappointed for many years. I believe a long, multi-year bull market is in progression.

 

Bull market has barely begun. Long way to go.

 

I think you'll both be quite disappointed within the next two years.  After that, I suspect we will see another long multi-year bull market.  We are only at the beginning stages of the deleveraging in Europe and I think the China bubble has finally popped.  The best indicator will be to watch home prices through Asia, Australia and Canada.  If you start to see them going down, things will slow down everywhere outside of the U.S.  North America will not be immune to the Asian flu, as the recovery has been underway here, but headwinds are coming.  That's my macroeconomic prognostications for now!  ;D  Cheers!

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Hi, Prasad:

 

I agree with you on most points, except the part "China bubble has popped"

At least for real estate there, the price surge has accelerated in some major cities, esp. in Beijing, in past few months.

The real estate prices in most 2nd tier and 3rd tier cites are still rising (very slowly), or keep flat

I don't think the real estate bubble has popped.

But anyway, the problem there is so serious that I don't even want to touch anything related to China now.

It's not as simple as en economic problem - it's much deeper

 

/Plato1976

 

Are you guys kidding or half/full-serious, I can't tell.

 

Anyways, if you're serious, with all due respect, I'm betting you will be disappointed for many years. I believe a long, multi-year bull market is in progression.

 

Bull market has barely begun. Long way to go.

 

I think you'll both be quite disappointed within the next two years.  After that, I suspect we will see another long multi-year bull market.  We are only at the beginning stages of the deleveraging in Europe and I think the China bubble has finally popped.  The best indicator will be to watch home prices through Asia, Australia and Canada.  If you start to see them going down, things will slow down everywhere outside of the U.S.  North America will not be immune to the Asian flu, as the recovery has been underway here, but headwinds are coming.  That's my macroeconomic prognostications for now!  ;D  Cheers!

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Sanj, you think we're gonna challenge the 2008 lows?

 

Not in the U.S.  But I can easily see a 20-25% correction in the U.S. 

 

Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet?  Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital?  With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%?  Or if Italy's government bond rates rise 3-4%? 

 

Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world.  We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value.  Cheers! 

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Do you adjust the cash level in your personal account based on your macro views? 

 

Sanj, you think we're gonna challenge the 2008 lows?

 

Not in the U.S.  But I can easily see a 20-25% correction in the U.S. 

 

Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet?  Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital?  With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%?  Or if Italy's government bond rates rise 3-4%? 

 

Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world.  We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value.  Cheers! 

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Do you adjust the cash level in your personal account based on your macro views? 

 

Sanj, you think we're gonna challenge the 2008 lows?

 

Not in the U.S.  But I can easily see a 20-25% correction in the U.S. 

 

Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet?  Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital?  With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%?  Or if Italy's government bond rates rise 3-4%? 

 

Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world.  We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value.  Cheers! 

 

Yup.  But I have no restrictions on the amount in any one idea in my personal account.  I can go 100% BAC if I want.  Whereas we have an internal cap of 25% for the fund.  So generally, unless there is an abundance of ideas, cash will always be higher in the fund than my personal account.  Cheers! 

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Sell in May and go away as the adage goes :)

 

Cheers

JEast

 

This year, that may not be a bad idea.  We have had a huge bull run to this point over the last 9 months or so.  I guess my discomfort is rising with the markets.  A significant correction would be totally within the norm of a secular bull, or a secular bear, for that matter.  But really, who the hell knows. 

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Not in the U.S.  But I can easily see a 20-25% correction in the U.S. 

 

Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet?  Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital?  With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%?  Or if Italy's government bond rates rise 3-4%? 

 

Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world.  We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value.  Cheers!

 

I agree 100%. Especially on Italy…  ;D ;D ;D

 

giofranchi

 

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

 

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I agree we may slow down but you need to look at history to see how markets have delevered.  If we look at Post WWII, you see a debasing of currencies in either a sudden (Germany, Japan) or a slow fashion (US, UK).  Depending on the magnitude of debasement, the market may decline or increase in nominal dollars but definately will decline in real purchasing power.  The question is what is the best investment in these environments (stocks, bonds, cash, real estate or resources)?

Another period to look at is 1931-34.  During this time, debt was in essence monitized by going off the gold standard.  In every case, you had big stock market and commodity rallies.  I think real estate, resources and stocks should be preferred over bonds and cash.  Leveraging real estate, resources and stock with modest low nominal IR debt may be the best strategy.  The one note with resources is you need to be careful of the LT obsolesense issues (coal to NG as an example).  Just my 2 cents.

 

Packer

 

     

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Not in the U.S.  But I can easily see a 20-25% correction in the U.S. 

 

Let me ask the bulls just one question...do we have a central international clearing house for derivatives yet?  Some of the black boxes at financial institutions are now transparent, but has the world gotten any clearer about derivatives risk or dark pools of capital?  With all of the financial engineering going on around the world right now, do we really know what could happen if China's property prices drop 40-50%?  Or if Italy's government bond rates rise 3-4%? 

 

Things are much clearer in the U.S., and I've been saying that for the last three years, but I cannot say that with any confidence about the rest of the world.  We are still long good, cheap U.S. equities, but we also have a third in cash and we thin out the herd as prices rise to intrinsic value.  Cheers!

Some what late reply to derivatives question:

  If you are talking about Interest-rate swap derivatives, in my opinion it is not much of an issue. Here is an interesting point, if you are talking about credit default swaps(CDS) derivatives, especially on MBS/ABS or corporate, the term is usually 5yrs. May be Corporates are little longer. So, anything written in 2007/2008, risk exposure will be done this year.

 

In my opinion, derivatives exchange for these CDS will be a big positive. But given that Fixed income securities dont have exchanges like equities, it is going to hard. If you are going to establish derivatives exchange, then the underlying securities need to in an exchange too. It is mind boggling that the fixed income market is bigger than the equities market, yet trades are done by phone only.

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I assume most investors have their go to anecdotal contra indicator....well mine just flashed a giant sell signal last night.

 

For reference, the day the market bottomed post election last year he was arguing that headlines were only going to get worse and was raising cash....

 

Last night the argument was that all risks are now off the table and the market won't correct until the Fed tightens.

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On the anecdotal side, recently I have had several friends and acquaintances - none of whom focus on the market - broaching the subject of stock market highs and either commenting on how the market is doing well and/or looking to get more exposed to the market.

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